Section 2754.1 - Certification Averaging, Banking, and Trading(a) Applicability -- The averaging requirements specified in this section apply only to engines or equipment with complete evaporative emission control systems certified to the diurnal or hot soak plus diurnal emission standards specified in section 2754(a) or 2757 of this Article and tested according to TP-902. Participation in the certification averaging, banking, and trading program is voluntary. The provisions of this section are applicable only for determining compliance with this section.(b) General Provisions. (1) The certification averaging, banking, and trading provisions for diurnal or hot soak plus diurnal emissions from eligible engines and equipment are described in this section.(2) A Holder of an Executive Order for an evaporative family subject to this Article may use the averaging, banking, and trading provisions of this section for the purpose of creating evaporative emissions credits.(3) A Holder shall not include in its calculation of credit generation and may exclude from its calculation of credit usage, any new engines or equipment not subject to this Article. Small off-road engines powered with compressed natural gas (CNG), propane, liquefied petroleum gas (LPG), or liquefied natural gas (LNG) may be certified under this Article, in order to generate evaporative emission credits. CNG, propane, LPG, and LNG engines must meet all applicable requirements in this Article to earn evaporative emission credits.(4) A Holder may include its entire inventory of an evaporative family subject to this Article in calculating the evaporative emissions credit for a given model year.(5) A Holder shall certify an evaporative family to an EMEL and shall determine an EFELD. The EFELD is calculated by a Holder and can be positive or negative subject to the limitations in subsections (b)(6) and (b)(7) of this section, provided the sum of the Holder's projected balance of credits from all credit transactions in a given model year is greater than or equal to zero, as determined under subsection (f). The EFELD is determined based on the evaporative test results, in accordance with TP-902, of the model of engine or equipment within an evaporative family expected to exhibit the highest evaporative emission rate relative to the applicable diurnal or hot soak plus diurnal emission standard. The EFELD is calculated by setting the EMEL for the model of engine or equipment tested at a level above the evaporative test results and then subtracting the EMEL from the applicable diurnal or hot soak plus diurnal emission standard for the model. (A) A Holder of an Executive Order for an evaporative family with a negative EFELD shall obtain positive emission credits sufficient to address the associated credit shortfall within the time period set out in subsection (b)(8) below.(B) An evaporative family with a positive EFELD may generate positive emission credits for averaging, banking, trading, or a combination thereof.(6) No walk-behind mowers within an evaporative family may have an EMEL greater than 1.5 times the applicable diurnal standard in section 2754(a) for model year 2023 and earlier model years, or 1.5 grams organic material hydrocarbon equivalent per test for model year 2024 and later model years.(7) No model of engine or equipment (excluding walk-behind mowers) within an evaporative family may have an EMEL greater than 3.0 times the applicable diurnal standard in section 2754(a) for model year 2023 and earlier model years, or 2.1 grams organic material hydrocarbon equivalent per test for model year 2024 and later model years.(8) A Holder must demonstrate compliance with this section within 270 days after the end of the model year.(9) No new Executive Order of Certifications will be issued to the Holder until a plan to make up the emissions deficit plus a penal amount of 25% of the deficit has been approved by the Executive Officer.(10) The failure of a Holder to comply with the diurnal or hot soak plus diurnal emissions standards in accordance with this section shall be grounds for revocation or suspension of the Executive Order of Certification in accordance with section 2770. A revocation under this provision shall be deemed to revoke the Executive Order of Certification ab initio.(11) The failure of a Holder to submit the plan required in subsection (b)(9) above within 270 days after the end of a model year shall be grounds for revocation or suspension of the Executive Order of Certification in accordance with section 2770. A revocation under this provision shall be deemed to revoke the Executive Order of Certification ab initio.(c) Averaging. (1) Negative credits from evaporative families with negative EFELDs must be offset by positive credits from evaporative families having positive EFELDs, as allowed under the provisions of this section. Averaging of credits in this manner is used to determine compliance under subsection (f)(2).(2) Subject to the provisions in subsection (b)(9), credits used in averaging for a given model year may be obtained from credits generated in the same model year by another evaporative family, credits banked in previous model years, or credits of the same or previous model year obtained through trading. The restrictions of this subsection notwithstanding, credits from a given model year may be used to address credit needs of previous model year engines.(d) Banking.(1) Beginning with the 2007 model year, a Holder of an Executive Order for an evaporative family with a positive EFELD for model year 2007 and subsequent engines and equipment may bank credits in that model year for use in averaging and trading. Positive credits may be banked only according to the requirements of subsection (f)(1) of this section.(2) A Holder may bank emission credits only after the end of the model year and after CARB has reviewed the Holder's end-of-year reports. During the model year and before submittal of the end-of-year report, credits originally designated in the certification process for banking will be considered reserved and may be redesignated for averaging or trading in the end-of-year report and final report.(3) A Holder may use credits claimed from a previous model year that have not been approved by the CARB in an averaging or trading calculation pending the review of the CARB. In the event such review does not substantiate the amount of credits claimed, an Executive Order will not be issued until a plan to make up the emissions deficit has been approved by the Executive Officer.(4) Commencing with the 2018 model year, any previously banked evaporative emission credits and any new evaporative emission credits earned can be used for up to five years. In the sixth year, any unused evaporative emission credits will expire. (For example, if a 2018 model year evaporative family earns evaporative emission credits, those evaporative emission credits may be used or banked until the 2023 model year. Any remaining banked evaporative emission credits earned within the 2018 model year will be invalid for use in the 2024 and subsequent model years.)(e) Trading. (1) A Holder may exchange evaporative emission credits with other Holders in trading.(2) Credits for trading can be obtained from credits banked in previous model years or credits generated during the model year of the trading transaction.(3) Traded credits can be used for averaging or banking.(4) Traded credits are subject to the limitations on use for past model years, and the use of credits from early banking as set forth in paragraph (d)(3).(5) In the event of a negative credit balance resulting from a transaction, both the buyer and the seller are liable, except in cases involving fraud. The Executive Officer may, after considering relevant factors, including, as appropriate, factors in Health and Safety code section 43024(b), void Executive Orders of all evaporative families participating in a negative trade ab initio.(f) Credit Calculation and Holder Compliance with Emission Standards.(1) For each evaporative family, evaporative emission credits (positive or negative) are to be calculated according to the following equations and rounded to the nearest hundredth of a gram. Consistent units with two significant digits are to be used throughout the equations. EFELD = Applicable diurnal or hot soak plus diurnal emission standard -- EMEL
Credits = EFELD x Production Volume
Where:
EMEL = the declared evaporative model emission limit for the model tested within the evaporative family in grams
EFELD = the calculated evaporative family emission limit differential for the evaporative family in grams
Production Volume is as defined in section 2752(a) (25)
(2) Holder compliance with this section is determined on a corporate average basis at the end of each model year. A Holder is in compliance when the sum of positive and negative emission credits it holds is greater than or equal to zero.(g) Certification Using Credits. (1) For certification relying on averaging, banking, or trading of credits, a Holder shall: (A) Submit a statement that the engines for which certification is requested will not, to the best of the Holder's knowledge, cause the Holder to be in noncompliance under subsection (f)(2) when all credits are calculated for all the Holder's evaporative families.(B) Calculate an EFELD for the evaporative family. The EFELD must be calculated to two significant digits.(C) Indicate the projected number of emission credits generated/needed for each evaporative family based on the projected applicable eligible production volume, the EMEL, and the EFELD.(D) Submit calculations in accordance with section 2754.1(f) of projected emission credits (positive or negative) based on production projections for each evaporative family.(E)(i) If an evaporative family is projected to generate negative emission credits, state specifically the source (Holder/evaporative family or reserved) and quantity of the credits necessary to offset the credit deficit according to projected production.(ii) If the evaporative family is projected to generate positive emission credits, state specifically the recipient (Holder/evaporative family or reserved) and quantity of the credits used to offset a deficit banked according to where the projected credits will be applied.(2) A Holder may supply the information required above in section 2754.1(g)(1)(C), (D), and (E) by use of a spreadsheet detailing the Holder's annual production plans and the credits generated or consumed by each evaporative family.(3) The Holder bears the burden of establishing to the satisfaction of the Executive Officer that the conditions upon which the Executive Order was issued were satisfied.(4) Projected credits based on information supplied in the certification application may be used to obtain an Executive Order. However, any such credits may be revoked based on review of end-of-year reports, follow-up audits, and any other verification steps considered appropriate by the Executive Officer.(h) Maintenance of Records. (1) A Holder shall establish, maintain, and retain the following adequately organized and indexed records for each evaporative family:(A) CARB evaporative family identification code;(B) EMEL for each model within the evaporative family;(C) Projected production volume for the model year; and(D) Records appropriate to establish the quantities of engines or equipment that constitute eligible production volume for each evaporative family.(2) Any Holder producing an evaporative family participating in trading reserved credits must maintain the following records on a quarterly basis for each such evaporative family: (A) The evaporative family name,(B) The actual quarterly and cumulative applicable production volume,(C) The values required to calculate credits as given in subsection 2754.1(f),(D) The resulting type and number of credits generated/required,(E) How and where credit surpluses are dispersed, and(F) How and through what means credit deficits are met.(3) A Holder shall retain all records required to be maintained under this section for a period of eight years from the due date for the end-of-model year report. Records may be retained as hard copy, CD-ROM, diskettes, and so forth, depending on the Holder's record retention procedure; provided, that in every case all information contained in the hard copy is retained.(4) Nothing in this section limits the Executive Officer's discretion in requiring a Holder to retain additional records or submit information not specifically required by this section.(5) A Holder shall submit all information requested by the Executive Officer within 30 days of the date of such request.(6) The Executive Officer may revoke or suspend the Executive Order for an evaporative family for which the Holder fails to retain the records required in this section or to provide such information to the Executive Officer upon request. No new Executive Orders will be issued to the Holder until the requested records are made available and/or a plan that describes the records to be retained as required by this section is approved by the Executive Officer.(i) End-of-Year and Final Reports. (1) End-of-year and final reports must indicate the evaporative family, the actual production volume, a description of the method used to determine the production volume, the values required to calculate credits as given in subsection (f), and the number of credits generated/required. Holders shall also submit a description of how and where credit surpluses were dispersed (or are to be banked) and/or how and through what means credit deficits were met. Copies of contracts related to credit trading must be included or supplied by the broker, if applicable. The report must include a calculation of credit balances to show that the credit summation is equal to or greater than zero.(2) The calculation of eligible production volume as defined in section 2752(a) (25) for end-of-year and final reports must be based on the location of the point of first retail sale (for example, retail customer or dealer) also called the final product purchase location. A Holder may use other methods to track engines for credit calculation purposes, such as shipments to distributors of products intended for sale in California.(3)(A) Unless otherwise approved or directed by the Executive Officer, end-of-year reports must be submitted within 90 days after the end of the model year to: Chief, Emissions Certification and Compliance Division,
California Air Resources Board,
4001 Iowa Street, Riverside, CA 92507.
(B) Unless otherwise approved or directed by the Executive Officer, final reports must be submitted within 270 days after the end of the model year to: Chief, Emissions Certification and Compliance Division,
California Air Resources Board,
4001 Iowa Street, Riverside, CA 92507
(4) Failure by a Holder to submit any end-of-year or final reports in the specified time for any engines or equipment subject to regulation under this section is a violation of this section for each engine or equipment in the evaporative family covered by the report.(5) A Holder generating credits for banking only who fails to submit end-of-year reports in the applicable specified time period (90 days after the end of the model year) may not use the credits until such reports are received and reviewed by CARB. Use of projected credits pending CARB review is not permitted in these circumstances.(6) Errors discovered by CARB or the Holder in the end-of-year report, including errors in credit calculation, must be corrected in the final report.(7) If CARB or the Holder determines that a reporting error occurred on an end-of-year or final report previously submitted to CARB under this section, the Holder's credits and credit calculations must be recalculated. Erroneous positive credits will be void except as provided in subsection (g) of this section. Erroneous negative credit balances may be adjusted by CARB.(8) If within 270 days after the end of the model year, CARB review determines a reporting error in the Holder's favor (that is, resulting in an increased credit balance) or if the manufacturer discovers such an error within 270 days after the end of the model year, CARB must restore the credits for use by the Holder.Cal. Code Regs. Tit. 13, § 2754.1
1. New section filed 9-20-2004; operative 10-20-2004 (Register 2004, No. 39).
2. Amendment filed 11-13-2017; operative 1-1-2018 (Register 2017, No. 46).
3. Editorial correction of subsections (c)(2) and (e) (Register 2018, No. 15).
4. Amendment of section heading, section and NOTE filed 9-14-2022; operative 1-1-2023 (Register 2022, No. 37). Note: Authority cited: Sections 39600, 39601 and 43013, Health and Safety Code. Reference: Sections 43013 and 43024, Health and Safety Code.
1. New section filed 9-20-2004; operative 10-20-2004 (Register 2004, No. 39).
2. Amendment filed 11-13-2017; operative 1/1/2018 (Register 2017, No. 46).
3. Editorial correction of subsections (c)(2) and (e) (Register 2018, No. 15).
4. Amendment of section heading, section and NOTE filed 9-14-2022; operative 1/1/2023 (Register 2022, No. 37).